That may seem initially true, but there are bound to me massive general economic effects from employing 1000 highly skilled workers and their families, and all the increased support business that would come up around them.

The fewer employees a plant has, the more highly skilled they need to be. In a non-automated plant there are many more employees, and they are for the most part unskilled. But in a highly automated plant all the unskilled jobs are replaced by the automation. The jobs that are left are the highly skilled ones, like maintaining and programming the automation.

So these jobs may not require a Ph.D, but they are highly skilled non-the-less.

Most of these jobs will likely not need to have much special skills, chip fab work is in some way just another form of assembly line work. I guess it is at most 200 of them that needs to be highly skilled.

Other than that I think your argument of an ecomony knock-off effect do hold.

no, but the other 2billion Euro's that AMD is spending will stay in the German ecconomy

I really doubt that. Most of that 2 billion will be going to companies like Applied Materials [yahoo.com]. Sure there will be local contractors involved in constructing the buildings (i.e. the grunt work), but all the really expensive bits that go inside will come from foreign multinationals.

What Saxony is really paying all that money for is the creation of jobs. When you do the math 600k per job ain't all that bad. Lets say

Not really, let's say they're each making 50k. 50 million a year. It stays 50 million a year, no matter how many people become the beneficiaries. Money isn't magical, one euro doesn't magically become two because another business moves into the neighborhood in order to serve the workers.

And what do they do with that 50 million a year? Stuff it under their mattresses? No, they spend it in the local economy, buying food, clothes, etc. for their families... and the local government gets a cut via the sales tax. Further, this increased spending on necessities and luxuries of life spawns the need for new workers, who receive a paycheck... and the government gets a cut via the income tax. And with this money, they spend it in the local economy... and the local government gets a cut via the sales tax. And so forth. So yes, money is magical as far as the government is concerned, since they get a cut out of any transaction.

Now, the above assumes that all new workers have to move to Dresden from other areas. But the same statements are true if the new workers are local residents who are receiving a lower salary (in which case it's less than 50 million, of course) or unemployed, which actually doubles the benefit, as they're no longer receiving public assistance.

No. You must be unaware of the 'multiplier effect' in economics, you can read up here [wikipedia.org]. Basically, if there is surplus productive capacity in a economy (which Germany surely has) a stimulative effect at employing that surplus will have spill over benefit to everyone (chip makers need bakers, burger flippers etc) economically 'near' them. The money goes round the economic circle and multiplies.

As Germany is in a depressed economic position (lots of deflationary pressures) such fiscal stimulus is useful (this was the argument for the Bush tax cuts - but that was probably unnecessary in the US (and was not 'directed' to undercapacity areas of the economy), but is much more necessary in Germany), not that this is a cure-all as German is suffering really bad structural problems too.

Then there is the money multiplier concept (a not very good definition here [digitaleconomist.com]) which explains how money increases as the definition broadens - is cash money, but the amount of money on deposit is greater than all cash in circulation and in bank tills This is a seperate issue and not relevant to this discussion, but a fine demonstation that of all things in life, money is one ofthe finest examples of something which multiplies.

Don't you think that if having the government handing out money made everyone richer, we would have noticed by now? I mean, it is what governments do best. There is plenty of experience in the field.

Every Euro the government pumps into the Dresden economy is one that it has taken out of some other part of Germany. Any multiplying effects it may have when paid out will be matched by the opposite effect where it was taken from.

And thanks for the articles, but if you read the first one it clearly points out

Why would the government give a $683M break to AMD to get 1000 jobs? That's two thirds of a million bucks per job.

Well, first of all it's in grants and allowances, so the governemnt probably doesn't look at it as "real money" - and I'm guessing it's probably spread out over a long period of time, ie tax breaks for the next x years.

Secondly, they are probably figuring that the plant will make suppliers and customers of AMD move nearby, thus providing more jobs and taxes. It's debateable if this actually works, but that's probably their thought process.

they are probably figuring that the plant will make suppliers and customers of AMD move nearby

Wafer fabs usually spend a relatively small amount of money in local economies. The bulk of the cost of a new fab is allocated to new equipment, which is mostly imported from the U.S. and Japan.

Still, there are the 1000 local permanent jobs, local jobs for construction of the actual building, money spent by equipment vendors support personnel in hotels, local costs for water and power, and local taxes.

A fun anecdote regarding water consumption: I write software for wet benches. I shipped a bug once to a fab in Phoenix that caused their DI water consumption to skyocket. The fab's DI water plant hit max capacity, and the City of Chandler had problems keeping up with the plant's consumption.

Here in Boise, local philanthropist J.R. Simplot built the city a park with a dozen or so soccer fields. The real purpose behind this park - a place to distribute processed waste water from the Micron plant. Not that I have any problem with that.

That could be the process, but my guess is that this is the process instead (and it is a political process, not a "thought" process):

AMD is a big company with money to spend (not bribes, but you know how it works). Being a single company, they also present a unified front for negotiations. The local government (or federal, I don't know with this deal) has few motivations to look unfavorably on AMD's requests.

On the other hand, income tax payers, sales tax payers, and property tax payers, do not have

That's right! Thanks to our center-left government, German Telekom (you know, T-Mobile) und Siemens (as in Fujitsu-Siemens) pay less in taxes than the janitors working there. And this is just the tip of the iceberg. Hurra to the forces of a free marked economy!

Just be glad that they are easy on corporations. The German economy is headed for a slow, eventual decline due to deep seated structural problems. It will wind up much like Japan. Taxes are too high, and that discourages investment. Productivity isn't that high.

Worse, to help offset the massive government debt, there is talk about raising pension contributions and corporate taxes. These will hurt the economy further, making the country less competitive and decreasing investment.

But your economy is stagnating and becoming less competive. You have to think in the long term. The German economy is going downhill, albeit slowly. The deep seated problems in the economy cannot be ignored. They will rear their ugly head, unless the German govenrment reforms.

To which I say: A different world is possible. Smash capitalism!

Socialism doesn't work. Germany has done very well because it is only somewhat socialist. It still has large, sucessful corporations that are the backbone of the econo

Germany's economy is stagnating, because money is being wasted by corrupt politicians and greedy corporate managers. Note, that Germany is right now richer than it was ever before (along with the rest of the western world) as expressed by the GNP. Right now, some unionists are rallying behind warning strikes, because the metall industry is offering an 1,2 increase (just around the inflation rate, after years of no increases), but only if the employees accept an unpaid increase in the working hours from 3

Ah. I don't so much disagree with you then. The way I see it though, is that Germany is being dragged back to a much more market oriented system, gradually. And of course it is not pretty. Reforms are definitely needed to avert severe economic problems.

Right now, some unionists are rallying behind warning strikes, because the metall industry is offering an 1,2 increase (just around the inflation rate, after years of no increases), but only if the employees accept an unpaid increase in the working hours fr

I'm not against private property and a capitalist system, I am however deeply concerned, that huge corporations and few individuals accumulate too much power simply because they are insanely rich. I think this has already happened.

By the way, in ancient Sparta, when a person became to wealthy (and thus too powerful) it was exiled. Think about it for a second.

Exiling the wealthy is rare--I have never heard of it before. Sparta is what? Greece I think. Right? Were they practicing DIRECT democracy at that time? I can't see it happening under REPRESENTATIVE democracy or something worse than that. Athens at one point, if I'm not mistaken, had direct democracy so perhaps Sparta as well--not sure.

The discrepancy in wealth will continuously increase under capitalism. There is no way around it because capitalism is an elitist system. All elitist systems result in a

I have to agree. This is even more disappointing as the government is cutting social funds. Here in Berlin they are cutting the low-priced metro ticket for people with low income, investments in culture and education, etc.

The economy lobbyists have such a strong influence on politics.. that's really sad.

The economy lobbyists have such a strong influence on politics.. that's really sad.

That will always be true IMO. Just like how space and time cannot be seperated and hence is called spacetime, you cannot seperate politics and economics. That's why I call it econopolitics.

I can see why people like to seperate them. Over 90% of the world is capitalist. And capitalism is a purely economic system (whereas most other systems are economics+politics). So it might seem that you can seperate them. But in re

I apologize for not being able to answer your question. I live in the US, you see. I am not familiar with the concept of government incentives and payments in exchange for favors from the corporate sector.
Not only that - I live in a state [wa.gov] which will give 2+ billion US, free training to their workers, freeway expansion around their facilities, and a free cargo dock to our favorite corporate entity [boeing.com] in exchange for 1,200 jobs.
But since our state government knows best, it must be done because it has a tremendous ROI.

But since our state government knows best, it must be done because it has a tremendous ROI.

I too, live in Washington State. We have one of the worst tax climates for businesses in the country, hence Boeing's eagerness to relocate. Basically, we taxed the living hell out of Boeing. When they decidided they wanted to move, the state government gave them ridiculous incentives to get them to stay. But, it was basically too late anyway. Many of the jobs have already relocated to Chicago and Kansas. We'll just

The best part about the whole deal is the Governor is now proposing a $1B/year sales tax increase. Gee, thanks Locke, I'm glad you gave all that money to a company who let go tens of thousands of workers!

>Why would the government give a $683M break to >AMD to get 1000 jobs? That's two thirds of a >million bucks per job. It's amazing that a $2B >facility can be staffed by only 1000 people

Germans don't care about the 1000 people working there, they care about:
- the other $1.4B that will come and will be spent in Germany for a good part,
- the thousands people needed to build a high-tech plant,
- the hundreds of firms and thousands people needed to provide (high tech) "raw" materials, and provide outsourced services to the plant (food, cleaning, software, maintenance, tools...) : do not forget that Germans are good at making tools and chemical products (which such a plant really need),
- the money that will go through their banks,
- the fact that this part of country really need jobs (previous Eastern Germany, 20% unemployment).

BTW: If you have an opportunity to visit this part of Germany, do no hesitate. Dresedn was totally destroyed in February 1945, but the Communists really succeeded in building it again [about their only success], and the area is very nice.

Nice to see corporate welfare doesn't just happen in the good ol' U.S...

I wonder what the millions of folks in the rest of Germany think about their tax money going to a mutlinational corporation just to build one plant with a thousand jobs? If they're like Americans, as long as they can fight over same sex marriage and the National Endowment for the Arts, they probably don't even notice.

Remember, a large portion of that money will go straight into the local economy. Construction will be done by local companies. Only the special equipment will come from outside, and most of that will be purchased with other money. I bet most of the money will be spent locally, and when it's done, they'll have a nice new fab in town.

Eastern Germany suffers from extreme unemployment (up to 20% in some areas) and has been in an economical crisis since the wall came down. The unemployment is the reason for the collapsing German welfare state.

Creating jobs and building an industry should be the #1 East German priority. The government did the right thing.

This is goverment intervention of the free markets.This is a threat to Globalism!

The period between 1950 and 1973 was by far the most successful of the century. This was an era characterised by capital controls, fixed exchange rates, strong trade unions, a large public sector and a general acceptance of government's role in demand management. The average annual growth in "per capita real GDP" throughout the world was 2.9% - precisely twice as high as the average rate in the two decades since then.

where it was one of the worst economic periods in history (on the tail end at least). One of the only times in US history where you had stagflation - inflation coupled with high unemployment and sagging GDP.

"...AMD received $683 million in grants from Germany and the state of Saxony for its next-generation microprocessor wafer facility."

it's not like AMD is gonna change the money intoeuro coins and stack them to make a nice lookingfactory made from coins, no sir.

the question really is:who owned the land before AMD bought it (tax?).who is building the factory(tax?).who is supplying power(tax?).who is building the generators that producethe needed electricity(tax?).who gets to have a peek at the technology (know-how) once complet(no tax!):)who gets know-how for building a chipproducing factory? (def. more to come!)etc.

this is a micro investment and the reward is def.going to pay off as long as people have to usecomputers (e.g. no telepathy available).

Micro investment? A micro investment is when you give $50 to a woman in bangladesh so that she can start her own business. Giving $683 million to a major corporation looks pretty damn macro to me. You are probably right that it will pay off for Germany and Saxony though. Having the factory there will generate a lot of taxable economic activity.

this is a micro investment and the reward is def.
going to pay off as long as people have to use
computers

Sometimes these things work out, sometimes they don't.
There is a growing body of evidence in the US that cutting sweetheart deals to bring in some corporate facility can be a losing proposition.
This one seems of a managable size, but in cases of large facilities employing thousands, there can be serious ripple effects as the local governments must build new roads, new schools, expand water trea

In the same way it would not be remarkable when a German company built a German factory, nor when an Indian company built an Indian factory.

It is a bit more remarkable when the US business drones without brains build another facility outside the US, then complain that US consumers arent buying it's products. Everyone is worried about the "jobless recovery", but they fail to point the fingers at themselves for shipping the jobs ( and salaries ) overseas. Mind you, I am not nessesarily of the "protectionist" mindset, but it does seem that some moderation is called for.

go to any city's paper and look in the local sections. Specifically look for articles containing "tax increment financing" or "TIF" (not the image format). This type of financing is an art form in the US.

Most of us don't care. They come and they go, but as a counterexample, KEZI TV in Eugene, Oregon, had a top news story not a week ago about Intel's announcment that it was building a new fab in Oregon.

Just because it's not on Slashdot doesn't mean it isn't happening. I'd suggest you don't use Slashdot as your only news source, or you will suffer permanent brain damage.

It is nice to see AMD expanding its company. I have been using AMD chips for several years now, and couldn't be happier. When a company spends the time and money to make developments in arcitecture, they should get something nice in return. Unfortunatly I don't feel intel has been making the advances. The Intel name has been carrying them for a while now, and its time AMD got their recognition.

I've been using the Athlon64 chips and couldn't be happier. Hopefully the new plant will help them nibble away another part of Intel's market share.

I lived in Dresden last year, and things haven't been too wonderful there since reunification. Lots of people have been leaving the city to head west, where there are better jobs. The city of Dresden actually pays people 300,- just to move there from other parts of the country (I think some other cities in the eastern part of the country do this as well). That money will easily cover the first month of rent in most areas of the city -- everybody I met would pay about 150,- per month.

That said, this will certainly help bring a little more 'balance' to the country (the Dresden VW plant also helps). 1000 high-paying jobs means potentially 1000 families...lots of little kids that need schoolteachers, food, clothes. I'm sure that the AMD plant will bring in way more money than this in taxes after a few years anyway...

Wow this is old news. We knew this when they first announced [xbitlabs.com] the plant. And here are some more figures:

AMD has arranged external financing and government support of approximately $1.5 billion during that period. The external financing is expected to include up to approximately $700 million in loans from a consortium of banks, including an 80% residual guarantee from Germany and Saxony, approximately $500 million in anticipated grants and allowances from the Germany and Saxonian governments (pending European Union Commission approval), and up to approximately $320 million in equity funding from Saxony and a group of European investors led by M+W Zander.

As soon as I saw the first thing I thought of was Hyundai/Hynix and some of the other Enterprise Zone projects started in Oregon in the mid-late 1990's.

The Enterprise Zones were areas designated for industrial development that would receive special tax breaks for the first five years or so. It looked really good on paper, and politicians could say they were doing something about the high unemployment, which looked really good to them.

No, it isn't a typo. They are talking about the size of the silicon wafer, not the processor itself.
If you had RTFA, you would have known that the whole point of this is that is more cost effective to use bigger silicon wafers since more processors can then be made out of a single wafer.

And to think of how socialists in the U.S. piss and moan when the federal government awards contracts to oil firms. Double standard, anyone? Who's to say that there's not something going on behind the scenes between AMD and Schroeder(sp)?

Of course, they aren't really giving money away to AMD. It is rather in the form of tax rebates and the like - it is not losing any money, just not bringing in as much as if AMD had paid full rates on everything (and the reality is that likely AMD would have gone elsewhere and not paid a dime).

I trust that you're not from around here, otherwise you wouldn't ask. The German government has cut down on income from the corperate sector for the last 25 years.

Also, while I agree to your hypothesis, that the 600+ million is a small investment to the potential future income by taxes, the point is moot, because large companies in Germany simply don't pay taxes anymore.

No, it's a very poor point, and while I may not agree with modding down of it, it certainly isn't in any way insightful. To use a cliche : "Give a man a fish and you've fed him for a day. *Teach* him how to fish and you've fed him for life. Sure $600k/piece would be enough for "the same people who'd work there anyway" to live off of for a few years, but the money will do far more good creating jobs and stimulating the economy.

Let me reiterate a point here: despite what Bill O'Reilly and Rush Limbaugh would

The concept of the classic welfare state (Germany, Denmark, Sweden and Norway) with socialism and a market controlled economy is not about taking away all off your return for hard work. It's more like the government takes a slice of it. So you won't get filthy rich if you work hard, you just get rich.

And about the philosophy; even if you don't filthy rich most people have other motivations besides money for working hard. As long as people feel they get an appropriate share of the material growth they are happy.
So I don't think much of the ambition is removed from the individual as there is no signs that the progress of society halts in these countries.

And who gets to decide what is an "appropriate share"? Taxpayers? Nope!

Ultimately; the decision is up to the voters. Whether they really influence the outcome is off course something to think off, but I don't think the democratic systems are any weaker in these countries than in USA.

That decision is in the hands of a government beaurcrat whose only job, it seems, is to pander to enough special interest groups to secure their next term in office.

And this is not the case in USA?
According to Transparenc [transparency.org]

The question remains if this is capitalism though. If the state and the companies get even more together and start to influence the other too much, we will be in the same state as communism.

Capitalism and communism are ideals, they may have little to do with reality. To say one or the other failed is therefore bung. Especially because the SU had little to do with communism. You could call China a communist state... are they failing?

All this said, I think they made the right decission too. There is no reas

Seriously, why not just take the cash and give it to the people who would have been employed there, and cut out the AMD middleman?

It's obvious, just giving the money to the people shows people that they do not have to work, and the government will just give them money. Atleast with this they are more productive then just sitting at home and watching television and getting fat. I believe that Germany's obese population is going to double within the next 10 years and just giving them money will not help it.

Because this way creates 1000 skilled jobs directly in the area, which increases tax income and reduces unemployment payments. The local economy is helped by the money from the jobs, other companies (builders, suppliers etc) in the area benefit. All round the area's economy improves. This is about long-term growth, not the short term benefits.

It is the job of the government, after all, to improve the lot of its people.

"It is the job of the government, after all, to improve the lot of its people."

I STRONGLY disagree! In a truly free society, one is given equal opportunity to improve his OWN (and family's) life. Whether or not he succeeds at that is in his own hands, not the government's.

The only role government should play in that is ensuring opportunity remain equally available to its citizens. It is not the job of government to force successful citizens to pick up the slack for those who aren't as successful.

You may "STRONGLY disagree" - but it is the will of the local population that sets the goals for any government.

If, the voters does set the goal of it's govenment to be improvement of the lot of the people, then so be it. Who are you to disagree - unless you live there and have a right to vote, in which case you can make your views heard just fine.

Did you know that before what you call socialism started (I'm referring to the worker movements in the 19th century), people were working 14 hours per day, had no days off and got no pay when they were sick? And this barely enabled them to make a living, because the owner of the factory grabbed all the money?Would you want to live that way, just because those who are rich have the power to rob you?

Socialists think that if you are robbed on a daily basis, it't better to be robbed by a democratic government,

That is not quite true, at least not over here, anyway. Taxes are high and rising, but they are rising proportionally.

I don't know the english term, but the fraction of the GDP that is government money is more or less constant.

The problem with the usual economic theories like neoliberalism or communism (I'm referring to Marx here, not what Lenin, Stalin and alii made of it), is that they don't really work.Still, at least we live in an age where democratic governments (usually) at least try to improve life

But as no society is truly equal, not everyone has equal opportunity. My parents could afford to send me to a good school, so I'm doing well now. Where's the equal opportunity in that? I now have an unfair advantage over those forced through circumstance to go to the local awful comprehensive.

"It is the job of the government, after all, to improve the lot of its people."

Actually, no. In a -free- republic the job of government is to manage the rule of law, provide for the common defence of the nation, and enforce contracts. Other than that they are supposed to stay out of the road and let people get on with their lives.

Anything else is just the forced redistributuion of wealth,otherwise known as stealing. Which is why East Germany is such a basket case in the first place. People are not insp

You AC's are right - in retrospect it is not "funny" - I suppose that I found the posting somewhat clever since it was primarily the factories of the WW II German war machine that the American B17's were destroying. Dresden IS a beautiful city and I like the German's, their culture, their Beer, and especially the Porsche so I apologize for the comment and further note that I would have been very offended if a Pearl Harbor comment had been made about a new AMD factory in Hawaii - sorry...

The parent just pulled "facts" out of his ass.Opteron X -> isnt planed5Ghz Fsb -> Opteron has no fsb500mm -> even intel says that the next 5 years they wont TRY creating bigger than 300mm wafers,65nm -> 2008 65nm will be old stuff...

It is nothing *unusual* to support investments as high as 2.5 billion. 20% is more or less moderate.This is usual economic policy in most states around the globe. Anti-Capitalists and Communists will critzise it though because they prefer state run chip production, haha.

Clearly, my understanding of what constitutes flamebait is much different from whoever happened to moderate this one! For my benefit, and the benefit of/.'s future posters everywhere, somebody please explain to me why my comments were considered "flamebait -1". I thought, if anything, it'd be regarded as insightful.

It's a simple fact that Germans are, by way of their taxes, subsidizing the cost of these chips -- Germany's government is giving huge amounts of money to AMD to establish their plant and that